Meridian Energy (NZSE:MEL) Is Back In Focus After Its Latest Update

Meridian Energy (NZSE:MEL) has drawn fresh attention after reporting a return to net profit for the year to June 30, 2026, alongside announcing an ordinary and supplementary dividend to shareholders.

The earnings rebound and dividend news come after a softer run for Meridian Energy’s share price. It is trading at NZ$5.44 after declining 6.04% over the last 90 days and 4.56% over 30 days, even though the 5-year total shareholder return is 29.02%.

Compare Meridian Energy's renewed profit and dividend profile with a curated set of resilient utilities and infrastructure stocks using our 300 resilient stocks with low risk scores built to highlight companies with lower risk scores.

Meridian Energy now trades at a discount to both analyst targets and an estimated intrinsic value after its return to profit and dividend update. Is the market correctly pricing in risk, or leaning too far toward caution?

Price to earnings of 110.8x, is it justified for Meridian Energy?

Meridian Energy currently trades on a P/E of 110.8x, which sits alongside a share price of NZ$5.44 and a sizeable discount to one DCF based fair value estimate.

The P/E ratio compares what investors are paying for each dollar of current earnings. For a regulated and capital intensive utility like Meridian Energy, it can reflect expectations for relatively stable cash generation, moderate earnings growth and dividend income.

At 110.8x, Meridian Energy is priced at a much higher earnings multiple than peers. The P/E is above the peer average of 28.5x and the global renewable energy industry average of 16.4x. It is also well above an estimated fair P/E of 35.5x that our fair ratio model suggests the market could move toward over time if expectations reset.

For investors who want to see how this fair ratio works across Meridian Energy and similar companies, it can help to look beyond headline multiples and compare the underlying drivers using the Explore the SWS fair ratio for Meridian Energy.

Result: Price-to-earnings of 110.8x (OVERVALUED)

However, investors still face risks if Meridian Energy’s high P/E compresses or if its New Zealand-focused revenue base encounters regulatory or demand shocks.

Find out about the key risks to this Meridian Energy narrative.

Another view on Meridian Energy’s value

While Meridian Energy looks expensive on a P/E of 110.8x, the SWS DCF model paints a different picture. At NZ$5.44, the stock trades about 44.5% below an estimated fair value of NZ$9.80, which frames current pricing as potentially cautious rather than stretched. Could cash flow assumptions be telling a more optimistic story than the earnings multiple suggests?

To see how this cash flow view is built and what would need to change for that gap to narrow, check how the SWS DCF model works through the Look into how the SWS DCF model arrives at its fair value..

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Meridian Energy for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 261 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With Meridian Energy showing both high valuation signals and a return to profit, it may be useful to act promptly and review the underlying drivers yourself. To weigh up the balance of concerns and positives in more detail, take a closer look at the 3 key rewards and 1 important warning sign.

Looking for more investment ideas beyond Meridian Energy?

If you are weighing up Meridian Energy today, it can help to compare it with other stocks that show different combinations of value, income and balance sheet strength.

• Spot potential value opportunities early by scanning our 614 high quality undiscovered gems that match strong fundamentals with relatively low market attention.
• Strengthen the defensive side of your portfolio by focusing on a list of solid balance sheet and fundamentals (433 results) that can better handle tougher conditions.
• Build a reliable income stream by zeroing in on 413 dividend fortresses that combine higher yields with more resilient payout profiles.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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